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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Subsidy
Profit Maximizing Rule
Incidence of Tax
2. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Public goods
Explicit costs
Price discrimination
3. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Explicit costs
Natural Monopoly
Law of Increasing Costs
Price inelastic demand
4. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Allocative Efficiency
Perfectly elastic
Fixed inputs
Monopolistic competition
5. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Spillover benefits
Determinants of elasticity
Accounting Profit
Economic Growth
6. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Income Effect
Market power
Average Variable Cost (AVC)
7. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Absolute Advantage
Substitution Effect
Dead Weight Loss
Excise Tax
8. The practice of selling essentially the same good to different groups of consumers at different prices
Price discrimination
Diseconomies of Scale
Shortage
Normal Profit
9. The sum of consumer surplus and producer surplus
Law of Increasing Costs
Income Effect
Total Welfare
Specialization
10. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Marginal Revenue Product (MRP)
Long Run
Implicit costs
Opportunity Cost
11. Ed = 0 - no response to price change
Perfectly inelastic
Resources
Explicit costs
Economies of Scale
12. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Average Variable Cost (AVC)
Total Fixed Costs (TFC)
Consumer surplus
Average Product of Labor (APL)
13. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Consumer surplus
Perfectly competitive long-run equilibrium
Price floor
Price elastic demand
14. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Diseconomies of Scale
Profit Maximizing Resource Employment
Marginal Revenue Product (MRP)
Marginal Analysis
15. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Economic Growth
Increasing Cost Industry
Incidence of Tax
16. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Unit elastic demand
Perfect competition
Monopoly long-run equilibrium
Monopsonist
17. Models where firms agree to mutually improve their situation
Free-Rider Problem
Short run
Collusive oligopoly
Spillover costs
18. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Derived Demand
Price Ceiling
Marginal Product of Labor (MPL)
Marginal Analysis
19. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Excess Capacity
Demand for Labor
Marginal Resource Cost (MRC)
Inferior Goods
20. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Law of Diminishing Marginal Utility
Resources
Total variable costs (TVC)
Constant cost industry
21. Ed = 8 - infinite change in demand to price change
Market Equilibrium
Relative Prices
Perfectly elastic
Collusive oligopoly
22. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Four-firm concentration ratio
Marginal Benefit (MB)
Substitute Goods
Price discrimination
23. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Substitute Goods
Perfectly elastic
Marginal Revenue Product (MRP)
Resources
24. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Producer surplus
Resources
Income Elasticity
Normal Profit
25. Entry of new firms shifts the cost curves for all firms upward
Law of Increasing Costs
Increasing Cost Industry
Monopsonist
Oligopoly
26. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Subsidy
Price Elasticity of Supply
Monopsonist
27. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Resources
Market Equilibrium
Break-even Point
28. Ed > 1 - meaning consumers are price sensitive
Income Elasticity
Price elastic demand
Relative Prices
Unit elastic demand
29. All firms maximize profit by producing where MR = MC
Constant Returns to Scale
Profit Maximizing Rule
Least-Cost Rule
Law of Demand
30. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Marginal Resource Cost (MRC)
Production function
Increasing Cost Industry
Monopoly long-run equilibrium
31. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Profit Maximizing Rule
Average Variable Cost (AVC)
Law of Supply
Utility Maximizing Rule
32. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Constant Returns to Scale
Price discrimination
Least-Cost Rule
Market power
33. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Opportunity Cost
Economies of Scale
Normal Profit
Variable inputs
34. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Least-Cost Rule
Negative externality
Inferior Goods
Price floor
35. The price of a good measured in units of currency
Utility Maximizing Rule
Absolute prices
Law of Increasing Costs
Total Fixed Costs (TFC)
36. TR = P * Qd
Total Revenue
Determinants of Supply
Four-firm concentration ratio
Consumer surplus
37. A firm that has market power in the factor market (a wage-setter)
Substitution Effect
Monopsonist
Absolute Advantage
Profit Maximizing Rule
38. Es = (%dQs) / (%dPrice)
Spillover benefits
Total Revenue Test
Price Elasticity of Supply
Negative externality
39. Exists if a producer can produce a good at lower opportunity cost than all other producers
Production function
Consumer surplus
Comparative Advantage
Break-even Point
40. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Perfect competition
Price elasticity
Average Total Cost (ATC)
Marginal Productivity Theory
41. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Normal Profit
Price inelastic demand
Total Welfare
Derived Demand
42. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Price elasticity
Derived Demand
Collusive oligopoly
Law of Supply
43. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Price Elasticity of Supply
Price elastic demand
Constant cost industry
44. The marginal utility from consumption of more and more of that item falls over time
Determinants of Demand
Monopolistic competition long-run equilibrium
Law of Diminishing Marginal Utility
Marginal tax rate
45. The most desirable alternative given up as the result of a decision
Opportunity Cost
Variable inputs
Comparative Advantage
Productive Efficiency
46. The imbalance between limited productive resources and unlimited human wants
Total Fixed Costs (TFC)
Cartel
Scarcity
Monopoly
47. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Substitute Goods
Absolute prices
Income Effect
Natural Monopoly
48. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Excess Capacity
Spillover costs
Economics
Law of Supply
49. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Law of Increasing Costs
Spillover benefits
Marginal Revenue Product (MRP)
Profit Maximizing Resource Employment
50. Exists at the point where the quantity supplied equals the quantity demanded
Marginal Resource Cost (MRC)
Accounting Profit
Market power
Market Equilibrium